The Wall Street Journal has tracked down the source of Norman Hsu's cash, and the good news is that the People's Republic of China didn't provide the funds -- at least, not some of them. However, the bad news is that Hsu apparently moved from Ponzi schemes to outright embezzlement as a former Woodstock backer proved as inept at background checks as the Democratic Party:

New documents reviewed by The Wall Street Journal may help point to an answer: A company controlled by Mr. Hsu recently received $40 million from a Madison Avenue investment fund run by Joel Rosenman, who was one of the creators of the Woodstock rock festival in 1969. That money, Mr. Rosenman told investors this week, is missing.

Mr. Hsu told Mr. Rosenman the money would be used to manufacture apparel in China for Gucci, Prada and other private labels, yielding a 40% profit on each deal, according to a business plan obtained by the Journal. Now the investment fund, Source Financing Investors, says Mr. Hsu's company owes it the $40 million, which represents 37 separate deals with Mr. Hsu's company. When Source Financing recently attempted to cash checks from the company, Components Ltd., the investors say they were told the account held insufficient funds.

Source Financing's arrangement with Mr. Hsu's company, according to court documents and investor accounts, echoes an older matter that came to light in recent weeks. In 1991, California officials charged Mr. Hsu with grand theft for failing to repay investors for money he raised to import latex gloves from China.

The Hillary Clinton campaign can stop the cash from going back to the bundled contributors. If Hsu stole $40 million, it explains how all of these families of modest means could afford to contribute eye-popping sums to her campaign and others. It also means that the FBI and Rosenman will want the money back.

This puts a brand new spin on the story, and a very bad development for the people through whom Hsu pushed these contributions. At a minimum, the donors who bundled Hsu's money face potential election-finance violations. The feds could add money laundering to the list of charges -- and since the money got sent around via wire transfers, wire fraud will likely get included. Finally, if the wire transfers show complicity to deceive, all of the contributors who participated may find themselves in the middle of a RICO prosecution, which could mean lengthy stretches in federal prison for everyone.

Furthermore, that would put the Democratic candidates and the organizations in a very uncomfortable position. The FBI would want to know just what involvement they had in Hsu's theft and subsequent manipulations of cash. While it would be unlikely that Hillary Clinton, Andrew Cuomo, Eliot Spitzer, the DSCC, and a host of other candidates and organizations would have knowingly approved embezzlement, some of their staff members could potentially have participated in the illegal activities that assisted it. In any case, it hardly paints the Democrats in a good light to have to answer depositions in a fraud involving the theft of $40 million, dragged out over the next several months.

However, the story still has some deep mysteries. One of the reasons Rosenman trusted Hsu was the 40% profits he and others received from investments in Hsu's companies in 2000-2004. With these companies exposed as fronts, the question remains how Hsu made those profits, which sucked in Rosenman and others. Did some other deep-pocketed entity front the money for Hsu in order to thoroughly launder the cash? It seems like the perfect long con -- show some flash up front and steal big in the end, but it still requires someone to supply the up-front money.

And if that was the point, why would Hsu bring all of this attention to himself by engaging in high-profile political fundraising? If theft was the point, it makes no sense. If influence and money-laundering was the point, who intended to benefit from it? Rosenman has his own connections to the Clintons and others. Who fronted Hsu?

Hsu's still an enigma. Now, however, we have literally hundreds of potential co-conspirators who will vie for the opportunity to mitigate their legal exposure and testify to Hsu's machinations. The FBI will not act gently, either, and neither will the IRS, which will undoubtedly recheck the returns of all involved in an effort to track the money themselves.

TrackBack

» Hsu Fund Scandal: Why the Dems Should Worry from frankhagan.com
On the heels of the $26,000 to be returned to Hsu from Hillary Clinton’s campaign, we find they state now that with an “overabundance of caution” they are returning over a quarter of a million dollars. Now comes the Wall Street Jour... [Read More]

» Another Hsu Drops on Mrs. Clinton from JammieWearingFool
Any other presidential candidate with such shady fundraisers would be history by now, but slowly Mrs. Clinton is being justifiably subjected to scrutiny over mystery bagman Norman Hsu. [Read More]

» Rosenman and Guilden-Hsu from American Thinker Blog
The Wall Street Journal reports that a producer of the Woodstock festival, Mr. Joel Rosenman, claims he invested $40 million with Norman Hsu, who told him he'd produce products for Gucci and Prada in China [Read More]

Comments (34)

This story is *over*. It's got no legs. The press is gonna kill it. If it involved Republicans, it would be on Page 1 for the next 14 months. Bloggers can short-stroke it, but it's never gonna see the light of day in any of the mainstream media.

Yes, the IRS... I wondered from the first time I heard about this scheme, just when the IRS would get involved. Though the FBI would be a pretty bad dream for anyone involved, the nightmare of the IRS getting involved almost makes me want to pity these folks.

At least when you are dealing with law enforcement types, you have some constitutional protections including a supposed presumption of innocence. With the IRS, since it is at first an administrative (rather than criminal) matter, these constitutional protections become very weak. The IRS can ruin your entire life, and leave it up to you to prove your own innocence.

Much has been made by some commenters about the ChiComs, and it's been suggested that Hsu is a communist agent. Perhaps he is, but let's wait and see what the investigation reveals. It could be that he's a foreign agent, or it could be that he's simply the bagman for a democrat fundraising machine designed to circumvent campaign finance laws and provide plausible deniablity to the candidates taking the money: "Why, I never DREAMED that this big-time donor was breaking the law to give me that money! I'll donate it to charity right away! The DNC is a charity, right?"

O' course, it remains to be seen whether or not the DoJ and MSM will try to follow the trail. Both have reasons not to do so:

DoJ - You're a career civil servant in the DoJ. Faced with the good prospects that the next president will have a (D) after her name, do you REALLY want to prosecute this investigation with vigour?

MSM - Oh, yeah. They're REALLY going to go out of their way to make the dems look bad. Sure. Now, if Karl Rove was somehow involved, they'd be all over this story. But when dems are involved... Say, didn't Britney get caught driving drunk again? And how about Abu Ghraib? Isn't the anniversary coming up again?

It still smells like a cover. Rosenman lost the money in 04 investing in what might have been counterfeit luxury goods. This time the scam might not work because the Clintons dont have a leash on the investigating agencies like they did during their administration.

In a perfect world, your scenario would unfold, Ed. We live in the world of the Gonzalez Justice Department, which already has announced its intention to drop the unlawful flight charges against Hsu when he is returned to custody in California.

The analogy to the Sandy Burglar plea deal is uncanny. For some reason, the Feds don't want to get the goods on the Clintons, and won't pressure Hsu. Why is that, exactly?

You know the drill, kids; every single story will have "Bush" in the headline. If the text mentions Hillary at all, it'll just say she returned all the money and isn't tainted at all so we shouldn't ask any more questions and JUST VOTE FOR HER.

The Dems have NO fear of any consequences, since they believe that their allies in the MSM will either ignore the story, blindly accept Hillary's 'explanations', or trash the reputations of those who dare try to bring it to the attention of the voters.

The money she 'returns' will be funnelled back to her through another channel, because nobody in the MSM will bother tracing it. Much like when they didn't want to trace the source of Al Franken and Air America's funding, when it was finally discovered they raided a charity for children and old people.

And before you know it, Hsu will have committed "suicide" in his jail cell. Well, that's what some of the Clinton conspiracy theorists are already predicting.

Frankly the corporate MSM will largely ignore or at least downplay the story no matter what any subsequent investigation reveals. Hillary Clinton will walk away from this unscathed. Hsu will be sent to prison. And Bush will somehow be blamed.

I understand that people who invest in venture capital projects know the risk is high. But come on. I don't think even the most risk tolerant investor is going to be willing to buy this. Rosenman lent $40 Million of other people's money to a convicted criminal's company and all he can say now is that the money is MISSING??

I don't know about Hsu or Clinton but unless his investors are all family members, I think Joel Rosenman should be hiring himself a whole bunch of really good lawyers right about now.

I tried to google Rosenman's company and couldn't find anything other than this WSJ article. I wonder who the investors are.

Ed wrote:
'While it would be unlikely that Hillary Clinton, Andrew Cuomo, Eliot Spitzer, the DSCC, and a host of other candidates and organizations would have knowingly approved embezzlement, some of their staff members could potentially have participated in the illegal activities that assisted it.'

Why this presumption? Whitewater, the Rose Billing records, the White House Travel Office, Hillary stock market wins, and on, and on. This is just one more scam, and they are never held to account for any of it.

Yah Lin “Charlie” Trie, President Bill Clinton’s longtime friend and a Democratic campaign fund-raiser, pleaded guilty Friday to two charges in his Little Rock, Arkansas trial as part of a plea agreement.

Trie is a key figure in the campaign scandal involving campaign donations from Asian sources to the 1996 Clinton-Gore re-election effort and other Democratic campaigns.

Let’s not pretend that Charlie was the only one,

Former Democratic fund-raiser John Huang pleaded guilty Thursday to a felony conspiracy charge for violating campaign finance laws and was sentenced to one year of probation, the Justice Department announced.

The Democratic Party has already returned more than $1 million in donations that Huang funneled to political campaigns from the Asian-American community.

The more things change, the more the Clinton’s stay the same,

The New York Times reported Sunday that “Components Ltd., a company controlled by Mr. Hsu that has no obvious business purpose and appears to exist only on paper,” has paid more than $100,000 to at least nine people who donated funds to Clinton and others. Hsu has raised more than $1 million for Democrats.

Isn’t it funny how these people seem to gravitate toward Democrats and the Clintons particularly?

One final note. We’ve heard endlessly from the left over the last 5 years that Bush is a “lawless” president and such. It’s quite clear President Clinton, perjurer among many other things, and Al “no controlling legal authority” Gore, broke more laws while in office than President Bush is even accused of. (polipundit)

This is why the Democrats are opening "hearings" into the prosecution and conviction of Governor Seligmann. They are desperate to intimidate the DOJ away from investigating their many financial crimes.

Michelle Malkin (www.michellemalkin.com) offers further evidence that the Hillary Clinton campaign (nor the DNC, for that matter) has no grounds for plausible deniability.

In fact at the same thread (and even more damning), a law enforcement figure emailed to explain how Hsu's questionable history should never have passed Secret Service vetting when the Clintons were in the White House. Questions arise as to why Hsu was given a pass.

Prediction: looking back on this time from 10 years on, the only scandal that will rival this Hsu thing, or whatever name it morphs into, will be the revelation of the utter corruption of the media in attempting to simultaneously smear any Republican they can, and cover-up any Democrat wrongdoing, even at the expense of national security.

The Dems and the media are BOTH going to ultimately be taken down on this one. Somewhere there is a young journalist who is going to become famous for blowing this sky-high. I hope he or she steps forward soon.

onlineanalyst, the Secret Service vetting is for now, with Hillary as a candidate, former First Lady, and current Senator. The FBI does vetting of potential nominees and appointees for the White House.

During the Clinton administration a lot of people would have failed FBI vetting, except that the Clintons basically told the FBI to buzz off. Which is why so many various appointees had embarrassing backgrounds show up later.

I wouldn't be surprised if Hillary told the Secret Service detail to skip the background checks (probably not that politely, she expressed considerable hostility and contempt towards the Secret Service while she was First Lady.)

Hsu's first California scheme left over $1M missing (or maybe it was his second scheme; his gangster kidnapping appears to have been by creditors). Want to bet that this latest one has over $2M missing, and that a substantial portion of those funds are now in the hands of the State of California? When the dust settles, I think we are going to see a whole bunch of knowing launderers (like the Paws and the Lees), and another batch of scammed people, who never realized they were contributing to a politician rather than investing in a business.

Interesting that a former Woodstock type would be seeking 40% returns, a downright egregious profit rate on a quick turn deal.

Very few business deals produce that kind of return quickly. So few that unless one really knows exactly what is going on, alarm bells and lights should be in full song.

If it too good to be true, something is wrong. Even if the first few tries pay off, count yourself lucky and quit. Sooner or later something running on those margins will either lose to the competition or turn out to be a fraud of some kind.

That's what free markets do, eventually, slaughter the hogs and stomp on the cockroaches.

I was also wondering about Source Financing Investors and their "37 separate deals". Who are these investors and are they also "Hillraisers" and "Friends of Hillary"? How much money have these investors donated to the DNC and Hillary? Are their any relationships between these investors and the 260 individuals on the Hsu donation list?

Is Mr. Hsu simply a con-man who has fooled everyone, the Democratic Party, including Hillary? Or does the money take us to the Orient?

It would appear that Mr. Hsu was a "Factor" in the import/export apparel business. So far, we know that none of his companies exist and his employees and families all contribute to democratic party leaders and Hillary.

Mr. Hsu told the investors he would then receive a letter of credit from a Chinese bank and that the manufacturer would ship the apparel to the U.S., where Mr. Hsu would deliver it to the merchant. Mr. Hsu would give the investment firm a check, post-dated for 135 days beyond the wire transfer, for the amount of the loan plus profit. When the check matured, Source Financing would deposit it and allocate the money to investors. The company that would carry out these transactions, Mr. Hsu told investors, was Components Ltd., set up in 1997.

As a minimum, we have tainted Asian money backed by Chinese banks to Hillary and the democrats. Remember that Mr. Hsu was a trustee for the New School with Bernie Schwartz as his sponsor. Is there a bigger Hillary or Chinese-Democratic party connection cover up that has been exposed by an old Hsu...

I have said this for years and the last 10+ years have proven me absolutely correct.
They are CROOKS.
Every last d*** one of them.
Democrats,Republicans,Independents,Libertarians,or whatever they choose to call themselves.
CROOKS.
THIEVES.
And I'm so mad I can't think of any more names to call these low life pieces of crap.
Sorry,Captain,I apologize for my language,but not the message.

You won't uncover the story till you link the murder of San Fran Chinotown prot-Taiwan business man Allen Leung (March 06) with Raymond "Shrimpboy" Chow--the guy who kidnapped Hsu in 1990.

And if you think Rosenman is the source for Hsu's money, you're very naive.

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Captain Ed is a father and grandfather living in the Twin Cities area of Minnesota, a native Californian who moved to the North Star State because of the weather. He lives with his wife Marcia, also known as the First Mate, their two dogs, and frequently watch their granddaughter Kayla, whom Captain Ed calls The Little Admiral.

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